The changes would preserve the current system's defining feature of a 20-year, "cliff-vesting," fixed-income pension. But it would ultimately provide smaller monthly checks, according to documents obtained by Military Times.

To compensate for that, the new proposal would offer three new cash payments to be provided long before old age - a 401(k)-style defined contribution benefit awarded to all troops who serve at least six years; a cash retention bonus at around 12 years of service; and a potentially large lump-sum "transition pay" provided upon retirement to those who serve 20 years or more.

In the broad view, the new plan would lower the total economic value of the military retirement package. Details vary, but several options show a roughly 10 percent reduction in cumulative lifetime payments.

Pairing that long-term reduction with the new cash payments is a strategic decision by Pentagon personnel experts, based on the notion that troops would prefer a plan that gives them more money up front to reduce the impact of smaller pension payments later in life.

"When compensation is paid out sooner, it has more value to the typical member who is assessing whether to continue in the military," according to a 44-page report outlining the new proposals.

Less than 20 percent of service members ever see any retirement benefits under the current system, so the new proposal may be welcomed by the vast majority of troops who do not plan to stay for a 20-year career.

What is sure to be one of the most controversial options outlined in the report would give "working age" retirees only a "partial benefit" pension check, forcing them to wait until a traditional retirement age, probably age 62, until becoming eligible for more robust monthly checks that reflect the "full benefit."

That is a recognition that most service members go on to second careers in the civilian world before leaving the workforce and retiring for good.

The basic building blocks of the new proposal are the cash incentives that would come while a member is still in uniform and right at retirement:

-- For all troops, the Pentagon would set up a Thrift Savings Plan account, the federal government's 401(k)-style savings account. Starting after two years of service, the Defense Department would provide an annual direct deposit equal to 5 percent of basic pay. No contribution is required from service members, although they could contribute more on their own if they chose to. Full ownership of these accounts would transfer to individual service members after they reach six years of service, with the money available for withdrawal beginning at age 59 1/2.

-- The services would offer a retention incentive payment for troops who clear a midcareer milestone, most likely the 12-year mark. This bonus might be equal to two months' pay for enlisted troops and six months' pay for officers. The individual services would control this payment, and it could vary by career field if manpower planners need to bolster retention in specific pockets of the force.

-- Upon final separation, troops who have served at least 20 years would get lump-sum transition pay. That might be as much as three years basic pay under scenarios that substantially reduce pension checks. It might be less than one year's basic pay under options that do not reduce the pension income as much. The size of this payment could be standardized under law to make it the same regardless of service or career field.

The proposals are detailed in a report prepared by the Defense Department's Personnel and Readiness Office and sent Thursday to Capitol Hill and also to the Commission on Military Compensation and Retirement Modernization, which is conducting a detailed study of military pay and benefits.

The proposals are not formal recommendations and are not included in the Pentagon's 2015 budget proposal.

The proposal is based on a deeper level of analysis than other plans drawn up outside the Pentagon. Manpower experts used complex computer models to help gauge how subtle adjustments in compensation affect troops' decisions about their own careers.

"Unlike some of the proposals in the past, we were able to model various concepts to determine their impact on recruitment and retention," said a senior defense official who helped write the report.

Defense officials acknowledge that the total savings from the new proposals would be modest, especially in light of the Pentagon's current budget environment that emphasizes large-scale cost reductions to meet near-term spending caps imposed by Congress.

Rather, the personnel experts who developed the proposal aimed to make it more efficient, to integrate the active- and reserve components under a single system and to give manpower planners more levers to shape a future force that requires an increasingly complex mix of skills and experience.

"Saving money was not of paramount importance," said another defense official who worked on the proposal. "It was of equal importance to making sure our members maintain a very good retirement and, secondly, giving our force managers a retirement system that will be able to maintain the force and give them some additional flexibility.

Any changes to military retirement would require approval from Congress, and lawmakers are unlikely to take any action until after the military compensation commission submits its formal report, due next February.